San Francisco Frontiers - Trump cancels Iran strikes, touts imminent deal

As the World Cup opening ceremony got underway in Mexico, Trump posted news of a potential breakthrough, triggering a stock market rally and sending oil prices tumbling on hopes that Gulf exports could soon return to normal.

"Based on the fact that discussions with the Islamic Republic of Iran have been brought to the highest level of Iranian leadership and approved, I have... cancelled the scheduled strikes and bombings against Iran this evening," Trump posted.

"Time and place of the signing to be announced shortly," he promised, after explaining that the finer points of the arrangement had been approved by the United States and its allies in the region, including Israel, with which Washington jointly launched the war in February.

There was no immediate official reaction from Iran, but the Fars news agency said that an informed source close to Tehran's negotiating team had said: "No text has been approved for a preliminary memorandum of understanding with the United States."

The Tasnim news agency noted that Trump had already announced a deal was imminent 38 times in the previous two months and warned: "Until Iran announces the matter of a potential understanding, any news from Trump on this subject should be regarded the same as his previous messaging."

Markets had been nervous that the latest exchanges of threats and missile fire across the Gulf would further disrupt the global economy, and the World Bank had earlier in the day revised down its global growth forecast to a level not seen since the coronavirus pandemic.

- 'Great detail' -

But stocks surged and oil futures contracts were down more than three percent in the minutes after Trump's optimistic announcement.

The war, which began on February 28 with a wave of US-Israeli strikes on Iran that killed supreme leader Ayatollah Ali Khamenei, was paused under an April truce, but efforts to hammer out a permanent end to the fighting had since appeared to stall.

Trump's statement, however, suggested that the back-channel mediation led by US allies like Pakistan and Qatar may have borne fruit -- despite his having vowed earlier that the US would hit Iran "VERY HARD TONIGHT".

"Discussions and final points have been, in both concept and great detail, approved by all parties involved, including the United States, Israel, Saudi Arabia, UAE, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan, Egypt and others," he posted.

"The Naval Blockade will remain in full force and effect until this Transaction is finalized," he said, just a day after he had declared that not only would US forces step up airstrikes but also that they would seize control of Iran's oil export facility on Kharg Island in the Gulf.

- Hardliners at home -

Just over an hour before Trump's post, Iran's chief negotiator in the talks, parliamentary speaker Mohammad Bagher Ghalibaf, had issued a stark warning.

"Wrong strategies and impulsive decisions will reset the entire board for the worse, explode energy infrastructure and markets and create an endless quagmire that you will be stuck in for years," he said.

General Ali Abdollahi, head of the Iranian military's central headquarters, warned that if the United States attacked "it will receive a harsher response than before, and the flames of war, in addition to creating insecurity in the region, will become more widespread and far-reaching".

Mediators Pakistan and Qatar had suggested back-channel efforts to negotiate an end to the war were ongoing in spite of the flare-up, though Islamabad cautioned it was "hard to be an optimist" in light of the escalation.

China, the biggest buyer of Iranian oil, had called for more negotiations, with a foreign ministry spokesperson urging the warring parties "to immediately cease military operations... (and) respond to the mediation efforts".

Civilians living under threat of a renewed strike in Tehran were pessimistic. Majid, a 35-year-old pharmacist, said the economic knock-on effects of the fighting were crippling normal life.

"I am absolutely not optimistic about the agreement being finalized, because the gap between the two countries is too wide," he said, blaming the lack of progress on Israel -- which also traded fire with Iran in recent days -- as well as hardliners at home.

Iran has renewed its warnings over the Strait of Hormuz, a vital waterway for oil and gas transport that it has essentially closed since early in the war, roiling global energy markets. Iran's new body overseeing the strait said it "will be closed until further notice".

burs/dc/amj

J.Scott--SFF